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Bloomberg
Hong Kong is exploring allowing listing of special purpose acquisition companies (SPAC), jumping into a market that
has sparked a frenzy of US dealmaking.
The government has asked the Hong Kong exchange and the city’s financial regulator to look into having SPACs list, according to Financial Secretary Paul Chan.
The aim is to allow the new fundraising arrangements, while upholding investors protections, he said in an interview with Bloomberg Television on Tuesday. “We are looking at it seriously,†he said, without providing a time-line.
The listing of SPACs has propelled IPO deals in the US to the fastest pace in 12 years so far this year, with the vehicles comprising 77% of the announced offerings. The city’s main Asian competitor, Singapore, is looking at opening up for SPACs. Hong Kong’s tycoons, including billionaire Li Ka-shing, are planning to raise such funds
in the US.
Allowing SPACs would further add momentum for the Hong Kong exchange, which last year had the busiest IPO year in a decade, boosted by the listing of a string of high-profile Chinese technology companies.
SPACs raise money from investors and then look to acquire another business, usually a private one, within two years. Historically just a US product, a growing number of Asia-based funds and financiers have
been setting up blank-check companies with the aim of snapping up a target in the fast-growing region.
The initial steps into SPACs come after the city shook markets last week by raising the stamp duty on stock trading by 30% to 0.13% as part of an effort to boost spending and relieve economic distress amid a record budget deficit and the highest unemployment in 16 years. Shares sold off broadly on Wednesday as the budget was announced, sending the stock of the city’s bourse plunging almost 9%.